Pertamina, AKR Corporindo to Procure Subsidized Fuels From 2018-2022: Regulator


JANUARY 08, 2018

Jakarta. Indonesia has appointed state-owned energy company Pertamina and privately owned AKR Corporindo to procure subsidized fuels from 2018-2022, said Muhammad Fanshurullah Asa, the chairman of downstream oil and gas regulator BPH Migas, on Monday (08/01).

Previously these appointments were awarded annually, and according to the energy ministry, the switch to a five-year assignment period would help companies develop fuel distribution infrastructure.

However, allocations or quotas will still only be valid for a one-year period and will be reviewed annually.

For 2018, Pertamina has been appointed to procure 7.5 million kilolitres (kl) of "Premium" gasoline with an octane level (RON) of 88 for sale outside the Java-Madura-Bali area, Asa said.

That is equal to about 47 million barrels. The octane level refers to the ability of the fuel to operate efficiently in an engine.

Pertamina has also been appointed to procure 15.37 million kl of subsidized diesel and 610,000 kl of subsidized kerosene in 2018, he added.

This year AKR Corporindo has been appointed to procure 250,000 kl of subsidized diesel.

Indonesia, Southeast Asia's largest economy, subsidies some fuels and controls fuel prices to protect consumers from price movements.

The country shifted the burden of gasoline subsidies to Pertamina in 2015, shortly after President Joko "Jokowi" Widodo took office, forcing losses on the company to ensure retail fuel prices did not rise too fast for consumers.

Indonesia is a net oil importer and its fuel subsidies have been blamed for creating a false economy, widespread smuggling and corruption.